According to recent media reports, the Canadian Automobile Dealers Association (CADA) has warned that the new tariffs imposed by the United States could lead to a sharp 25% drop in Canada's new car sales this year.
Tim Reuss, President of CADA, stated, "In the most optimistic scenario, the market will remain flat compared to last year, with new vehicle sales expected to stay around 1.85 million units." Just two weeks before the tariff dispute, the association had projected 2025 sales to reach 1.95 million vehicles.
Representing 3,300 franchised dealers across the country, the CADA noted that depending on how the industry responds, the worst-case scenario could see the market shrink to just 1.5 million units. "We are currently working with manufacturers and suppliers to assess the situation," Reuss added.
On April 3, U.S. President Donald Trump imposed a 25% tariff on imported vehicles that do not meet the rules of the USMCA (United States–Mexico–Canada Agreement). Even compliant vehicles with non-American parts face the same 25% tariff. In response, Canada announced retaliatory tariffs on U.S.-made vehicles the same day, although U.S. auto parts were not included.
The CADA, along with several industry analysts, warned that the new tariffs would drive up car prices, potentially stall the North American auto industry, and risk triggering production cuts, layoffs, and even a broader economic downturn.
The impact of the tariffs is already being felt. Stellantis announced it would halt operations at its Windsor, Ontario plant for two weeks starting April 7, affecting 4,500 employees and 1,500 supplier workers. Its Toluca assembly plant in Mexico and some U.S. parts factories have also been temporarily shut down.
Although Trump's newly announced "reciprocal tariffs" target many countries, Canada and Mexico are currently exempt.
Despite not being on the reciprocal tariff list, Reuss noted that Canadian steel and aluminum exports to the U.S. are still subject to a 25% tariff.
"The biggest problem is this uncertainty," said Reuss. "Consumers who feel unsure about the future may delay their vehicle purchases-something we certainly do not want to see at this stage."
